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I can offer a few comments.

First off, the idea of any third party selling file downloads is somewhat
absurd.

I think Apple is given a lot of credit while all they did was wait until the
majority of major acts had negotiated a deal for files with their label.
Waiting until they could offer star power was smart but not exactly
brilliant marketing. Most of Apple's competition was trying to force
compulsory licensing on labels and artists. In fact I think Napster was a
lot more about scaring labels into supporting compulsory licensing that
would take the power to negotiate exclusive distribution away from artists
than it was about innocent kids and hackers vs. the big bad record labels.

At the time, several label people told me that they were viewing i-tunes as
an experiment to learn how to make such a business work by letting Apple
make all of the mistakes. As Tom alluded to, it was also a way to not
alienate the biggest record retail operations who are much more powerful
near-monopolies than any of the major labels. At this point those retailers
are reducing their stock of CDs dramatically so there is little reason to
pander to them by not selling downloads direct.

Bob Olhsson Audio Mastery, Nashville TN
Mastering, Audio for Picture, Mix Evaluation and Quality Control
Over 40 years making people sound better than they ever imagined!
615.562.4346 http://bobolhsson.com  http://www.thewombforums.com